Who Owns Pakistan by Shahid-ur-Rahman

183 Pages·2013·1.29 MB·English

Who Owns Pakistan
By
Shahid-ur-Rahman
Reproduced by
Sani H. Panhwar
CONTENTS
ABriefintroduction-Forthosewhodonot likethetitle .. .. 1
Prologue .. .. .. .. .. .. .. .. 3
ChapterOne- Pakistan’s EconomicSaga .. .. .. .. 8
ChapterTwo-Whoowns Pakistan? CorporateQuiz .. .. 56
ChapterThree–HowTheyMakeMoney .. .. .. .. 80
ChapterFour-Pakistan’s Tax Web .. .. .. .. .. 106
ChapterFive -MoneyandPolitics .. .. .. .. .. 118
ChapterSix -Pakistan’sRobberBarons .. .. .. .. 125
Epilogue .. .. .. .. .. .. .. .. 171
Bibliography .. .. .. .. .. .. .. .. 173
References .. .. .. .. .. .. .. .. 178
A Brief introduction - For those who do not like the title
Howelseit shouldbecalledwhen
 A sugar mill set up with tax payers money at an estimated cost of Rs 300 million
is sold foratokenpriceofRupeeone,
 The government majority shares in Pakistan’s biggest chain of hotels are dished
out free to a social climber, by giving him a loan to facilitate the purchase and
thenwritingit off,
 A business shark manages to secure 38 loans totaling Rs 3.5 billion through fake
collaterals, escapes when foundout andis livinghappilyabroad,
 An unknown entity is granted a loan of Rs 1.18 billion without any collaterals on
telephone call from Islamabad and the banker who sanctioned the loan ends up as
afederal minister,insteadofendingupinprison,
 All five loans worth Rs 500 million of an enterprising businessman heading
FPCCI-CommitteeforRevival ofSick Industrial Units arewrittenoff
 Twelve foreign currency loans of an industrial tycoon, amounting to Rs 672
million are converted into a rupee loan and rescheduled so that repayments will
start in year 2002 instead of 1990. When the matter is raised in Supreme Court,
the tycoon who has expanded his business abroad is granted another loan to repay
therescheduledloan,
 Eighty industrial units including 32 biggest set up by public and private sector in
last 50 years are sold for a paltry amount of Rs10 billion. New owners are
defaulting in the payments of Rs 4 billion to Privatization Commission and
liabilities of privatized units worth tens of billion Rupees in local and foreign
currencies arebeingpaidbygovernment ofPakistani.e.taxpayers
 1,500 individuals and firms make use of 80 % of total bank credits, Rs 130 billion
are stuck up in bad loans and Rs 8.2 billion have been written off. While the
public demands recovery of stuck up loans, the government has come out with
schemes torescheduletheloans and grant newloans tothesamedefaulters.
 The common men bear the burden of 100 different taxes prevalent in the country
but the super-rich are provided escape routes of exemptions and tax holidays, 180
ofthem inpayment ofincometax alone.
If youstill questionthetitle,pleaseconsiderthis:
The House of Habib has about 90 units in its fold, Mian Mohammad Mansha is director
onboards of45companies, Ittefaq controls at least 29units,
SadaruddinHashwani has 25 companies, Monnoos have 18 textile and sugar mills,
Farooq Hassan of Hassan Associates lives in a house insured for 4 million dollars, the
house built by Bashir Ahmad of Escort group over 40,000 square feet in Gulberg Lahore
has a library custom made in London, Farida Saigol lives in a house sprawled over 68
WhoOwnsPakistan; Copyright©www.panhwar.com 1
Kanals of land in a posh locality, Seth Abid has invested Rs 5 billion in real estate in
Lahore and his front men control Lahore Stock Exchange, Wedera Ghulam Mohammad
Mehrowned100,000 acres andGhulam MustafaJatoi owns 80,000acres.
It is thesepeople,theirlike,KithandKinwhoownPakistan,forwhom the system works.
Their true worth is not known even to government. My investigations have revealed that
top 44 business groups own assets worth Rs 500 billion or equal to the size of Pakistan’s
budget.YETTHEYPAYMARGINALINCOMETAX. Inseveral cases notax at all.
Is thequestion‘Whoowns Pakistan’inappropriate?
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Prologue
“I Nawaz Sharif, do solemnly swear that I am a Muslim and believe in the unity
andoneness of God.
That Iwill bear truefaithandallegiancetoPakistan.
That as Prime Minister of Pakistan, I will discharge my duties and perform my
functions, honestly, to the best of my abilities, faithfully, in accordance with
constitutionof IslamicRepublicof Pakistanandthelaw andalways inthe interest
of thesovereignty,integrity,solidarity,well beingandprosperityof Pakistan.
That I will strive to preserve the Islamic ideology which is the basis of the
creationof Pakistan.
That I will not allow my personal interest to influence my official conduct or my
official decisions.
That Iwill preserve,protect anddefendthe constitution.That inall circumstances.
As Pakistan’s first industrialist Prime Minister was repeating the oath of his office read
byPresident Ghulam IshaqKhanon Nov.61990intheDarbar Hall ofthe Presidency,my
mind was racing back to Dec. 2, 1988 when in the same hall another Prime Minister
Benazir Bhutto, was administered the same oath by the same President. Bhutto was
dismissed disgracefullyin twentymonths bypresident Ishaq on charges of corruption and
inefficiency,leadingtootherelections whichbrought Nawaz Shariftopower.
A day before taking oath, Benazir met President Ishaq and Army chief Aslam Baig and
on return from the meetings told a press conference at the residence of her host, Dr. Niazi,
“Wearenot comingas freeagents”.
Benazir Bhutto had the grace to accept before the national and international press that her
government would be a chained one, not completely independent in all respects. But
unlike her Nawaz Sharif is man of few words. It is said that a politician without words is
like gun without bullets, useless if not worthless. He was therefore; an interesting
political case-study because he has reached the top not by climbing the ladder, rung by
rungbut as thoughsome supernatural powerhadpositionedhim there.
How was it that he reached the second highest political office in country without milling
through streets ofPakistan,as expectedof a politician? Whowere his invisible supporters
and mentors? What was his real strength? Was it his economic power or his avowed
oppositiontoBenazirBhutto?
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These were some of the questions in my mind as I watched Nawaz Sharif take oath that
day. I am sure similar questions must have crossed minds of others who were watching
theceremonyonPakistanTelevision.
In his book “A study in the power of money today in USA”, Ferdinand Lindberg says
that it is in the very nature of power to exert itself and thus it were the owners of wealth
who were making or frustrating public politics in the United States. Was Nawaz Sharif
also a case of money exerting itself to make or unmark public policies in Pakistan? I
askedmyself.
It is said that some people are born great, some achieve greatness and some have
greatness thrust upon them. The Pakistani politics abounds in people who had greatness
thrusted upon them, by establishment or “agencies” which are said to be ruling Pakistan.
Was Nawaz Sharif another case of greatness being thrust upon him or was he being
thrusteduponthepeople ofPakistan? Iasked.
It were these questions storming my mind as I sat in the Darbar Hall of Presidency that
gave birth to the idea of this book. I promised myself to study Nawaz Sharif’s style,
politics andeconomicpolicies. It was not meant tobesomethingpersonal, aninquiryinto
the value and assists of a man who had risen to be Prime Minister of Pakistan. It was to
be the study of a phenomenon, an inquiry into wealth of the 22 families and the process
bywhichtheyacquireandaccumulate wealthand power.
If Nawaz Sharif was not a case of wealth exerting itself then how to explain the entryand
riseofanindustrialist intheportals ofpower?
Technically this study should have taken five years but I had a premonition that if I was
planningthe studyofthe tenureof newPrime Ministerthen Iwouldhave farless thanthe
five years of stipulated term. The premonition was strengthened when immediately after
the oath taking ceremony, my friend Ghulam Hussain of the Urdu language periodical
“Sayassi Log” invitedmeandAnwarMansuri of GermanPress AgencyDPAtohis room
in Islamabad Hotel and predicted over a cup of tea that Nawaz Sharif would not last more
thana year.
His prediction would have come true but like his opponents, Nawaz Sharif’s mentors also
underestimated the strength and resilience of their protégé. Many people, including his
opponents fail to realize that like Zulfikar Ali Bhutto’s legacy, Nawaz Sharif is and will
always remain a force to reckon within Pakistani politics, because he was reaction to
Bhutto’s politics. And according to Newton’s third law of force reaction is always
equallystrong,intheoppositedirection.
Nawaz Sharif was not an individual. He symbolizes a state of mind contrary to Z. A.
Bhuttoandhis philosophyandthoughts wereborn out ofashes of Bhutto’s autocratic rule,
particularly nationalization policy. Even if, by a magic wand Nawaz Sharif was to
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disappear from Pakistan’s politics, somebody like him would always be there to lead the
powerful alliedforces opposedtoZ.A. Bhuttoandhis philosophy.
It was on Oct 24, 1990, that I took first small step for the accomplishment of my self-
assigned task by writing two letters, one addressed to Prof. Gustave Papanenk of the
Boston University and the other to Prof. Lawrence White of the New York University.
The two were well-known for their exhaustive study about the 22 families in Pakistan in
thepreandpost nationalizationperiods.
In myletters Itold them about myintentions to update their work and sought their advice.
Papanek responded and among other things suggested that while ranking the 22 families,
I should also find out the worth of their unlisted public and private limited companies,
since the previous studies were based on the assists held by these groups on Karachi
Stock Exchange (KSE). That was a tall order that I have accomplished only partly and
hopethat someotherenterprisingandmore resourceful journalist wouldfollowit up.
Next I wrote letters to the 22 families, stating that I wanted to write about the pioneers of
industrial development in Pakistan and would they care to provide me some literature
about theirgroups andancestors whohad founded them. Igot onlythreeresponses.
Even mybids to meet Farooq A Shaikh and Sadaruddin Hashwani who reside in the twin
cities of Rawalpindi and Islamabad failed. It was only while I was finally brushing my
books I managed to meet Shaikh and Hashwani, besides Nasim Saigol and Razak
Dawood after hectic chase. Despite telephone calls I failed to meet Mian Mansha who
was the one man I wanted most to meet because his Nishat group has emerged as
Pakistan’s biggest group in my ranking. I decided therefore, at the outset that instead of
trying to meet the members and leaders of 22 families, I will talk to people around them,
their present and former employees, officials and people in the corporate sector, who
might haveworkedanddealt withthem.
I have been reporting economic affairs for nearly thirty years and have covered all the
federal budges, except in 1980 when I was abroad. During 1971-77, Pakistan People’s
Party, government of Z. A. Bhutto, I had rapport with Feroz Qaisar, special assistant to
Prime Minister and Rahim Jan, Chairman, Corporate Law Authority (then called
Securities and Exchange Authority of Pakistan or SEAP). They were always ready and
willingto talk and listen. It was mainlythrough listeningto them that Ideveloped interest
intheworkingofthecorporatesector.
Since most of my work as an economic reporter was limited to covering the government
policies in Islamabad, my knowledge of the corporate sector and big business was
rudimentary. Myfirst job, thus, was to identifycompanies bygroups. It took two years to
identify the major groups and their companies. I found out that several of the proverbial
rich groups werenot rich anymore andhadmoved abroad, became extinct or grownsmall
throughdivisions andsubdivisions.
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Bitten by Bhutto’s nationalization and furor over the concentration of wealth, the
proverbial 22 families started covering their tracks in the 1970’s, arranging their eggs in
different baskets, digging-in, dispersingand makingit difficult to identifythem. However,
ifthereis awill thereis a way.
I read thousands of corporate reports of companies listed on Karachi Stock Exchange and
company reviews in newspapers. Courtesy Shaikh Ikram ul haq of the Daily, Business
Recorder of Karachi, I scanned the newspaper files for the last ten years. I had hardly
started arranging the book in my mind when Nawaz Sharif started on the collision course
withPresident Ishaq.Sands oftimestartedrunningout forhis government.
Nawaz Sharif’s exit from power came in August 1993 and, unfortunately, for my book.
By the time I had not yet started writing the book. It was only in January 1994 that I sat
down at my computer and slugged my first chapter, under the file BBR (Bismallah Al
Rehman Arahim), an abbreviation borrowed from BBR, Modaraba of the Dawood group.
I sat out to identify and rank the super rich in Pakistan, trace their origin, chart their
growth and find out how at least some of them became overlyriches overnight. But book
in the reader’s hands is not simplyabout the wealth of the 22 families or their indictment
foraccumulatingit dubiously.
Z. A. Bhutto demolished monopolies and Nawaz Sharif attempted to reincarnate them.
And although what each professed and did was the need of the hour, both became the
victims of haste. One nationalized and the other privatized. Nationalization retarded
Pakistan’s growth in many ways but its worst consequence was the scars inflicted on the
psyche of the big business, evergreen even two decades after the nationalization. It
alienated the industrialist from the economic mainstream and, as if by a collective
decision, several of the original 22 families who pioneered development in Pakistan
switched off investment in long gestation projects. The Pakistani businessmen who were
planning mega projects in 1971 and are still capable of setting up mega projects resigned
to remain spinners, sugar manufacturers or best at best cement manufacturers. The
reservation on the part of the people who had the surplus capital and the know-how to
lead the country to a take-off stage remained to date the single biggest factor holding up
thefloweringof country’s full economicpotential.
A white paper on “Economy under Bhutto”, released by Zia ul haq in 1979 had observed
that “nationalization ofindustries byBhutto was intended to break the economic potential
of any possible political opposition. At the same time it (nationalization) placed with the
government tremendous power of patronage, resources and employment opportunities
whichcouldbeused forthesupport ofpartyinpower”.
Ironically the same argument was used by Benazir Bhutto and her allies against Nawaz
Sharif’s privatization. It was stated in speeches and press conferences by the Pakistan
People’s Party leaders that if Nawaz Sharif was allowed to proceed with plans for
privatization, he would bring about such a concentration of power in the hands of a
“coterie of business class” that it would be impossible for any political party or
organizationtodefeat him andhis friends.
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The book in the following pages, thus, is not merely an academic journey into two recent
eras of Pakistan’s economic history. It is an investigation into the causes of concentration
of wealth in few hands, effects of nationalization of key industrial units and two decades
later their privatization. Like Charles Dickens “Tales of two cities”, Bhutto’s
nationalization and Nawaz Sharif/ Benazir’s privatization promised light but brought
darkness,springofhope that turnedout tobewinterofdespair.
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